Historical performance

Looking after your money is at the heart of what we do. We have more than a decade's experience of being a peer-to-peer lender. So let's take a look at the numbers: how have our default rates performed against our expectations?

How have returns performed against expectations?

We monitor lifetime default rates very closely: if it's lower than the expected, we pass on all benefit directly to our investors; likewise, if default rates are higher than expected, then investor returns will be lower than expected.

Returns: Estimated vs. actual of loans originated in their respective year

* We don't expect further defaults prior to 2014, but there may be further recoveries coming in, which would increase actual returns

Amount paid out by Safeguard fund to cover defaults for loans originated that year, divided by the contributions made into the fund for those loans

Safeguard fund usage

N/A

N/A

45%

78%

97%

99%

85%

N/A

N/A

Weighted average APR of loans originated that year (taking loan size into account)

Borrower APR

8.9%

8.5%

7.0%

7.4%

7.8%

9.9%

10.3%

9.5%

10.4%

*Excludes rate promise bonus

We use our expected lifetime default rates for loans to inform the target return for investors. We monitor this lifetime default rate very closely, and if it's lower than expected we pass on all benefit directly to our investors. Likewise, if default rates are higher than expected then investor returns will be lower than expected.

Investor return is defined as the weighted average investor interest rate of loans (borrower interest rate net of fees, weighted by each loan's amount) minus the annualised actual loss rate on these loans.

Investor return is calculated for all retail-funded loans disbursed in each calendar year. The annualised actual loss rate is calculated as:

This methodology is used to calculate both the estimated and actual investor returns.

Additional considerations

In order to be included in the calculation Zopa must have requested the first repayment on a loan

All interest received by lenders is calculated net of fees. Pre-6th April 2015 Zopa charged a monthly lender fee. From 6th April 2015, this has been moved to the loan level as a loan servicing fee, which is deducted to calculate advertised rate. For simplicity these fees have been treated in the same way for this calculation

Zopa's Rate Promise ran from Jan-2014 to Jan-2015 and offered upfront compensation to lenders where matching failed to achieve the headline rate. This has not been included in the actual investor returns

All other Zopa bonuses e.g. early adopter, cash back, tell a friend have been excluded from this calculation as they are not tied to actual loan performance

How have default rates performed against expectations?

In order to meet expected returns for our investors, we're dependent on how accurately we can predict defaults. A borrower is considered in default after missing four months' worth of repayments. We set an expected default rate at the start of each loan and update it as the loan performs ('revised projected defaults').

Defaults: Expected vs. actual

* We don't expect further defaults prior to 2014, but there may be further recoveries coming in, which would increase actual returns

Default expectations at loan originationAmount of defaults we expect over the lifetime of loans when we originated them.

Revised default expectationsUpdated amount of defaults we expect over the lifetime of loans. Revised periodically.

Actual defaultsTotal defaulted loan amounts, as a percentage of amount lent in the calendar year.

Actual defaults so farLoans originated after 2014 are still outstanding and actual returns will still evolve.

Last updated 1 April 2019

Expected defaults at origination

Actual defaults so far

% of loans repaid to date

Revised projected defaults

Actual arrears (>45 days)

Risk markets available to retail investors

2019

3.77%

0.00%

5%

3.77%

0.04%

A*–E

2018

3.56%

1.05%

29%

3.56%

0.60%

A*–E

2017

4.52%

4.10%

64%

5.08%

0.55%

A*–E

2016

4.14%

4.57%

83%

4.63%

0.31%

A*–E

2015

2.88%

3.14%

93%

2.90%

0.08%

A*–C

2014

2.06%

1.72%

99%

1.72%

0.02%

A*–C

2013

1.30%

0.57%

100%

—

—

A*–C

2012

1.26%

0.56%

100%

—

—

A*–C

2011

1.72%

0.58%

100%

—

—

A*–C

2010

2.31%

1.35%

100%

—

—

A*–C

2009

2.43%

1.18%

100%

—

—

A*–C

2008

3.58%

4.04%

100%

—

—

A*–C

2007

2.74%

0.33%

100%

—

—

A*–C

2006

1.28%

0.13%

100%

—

—

A*–C

2005

1.01%

0.00%

100%

—

—

A–B

Important information

Before you go any further, remember past performance is not a reliable indicator of future results. And forecasts are not a reliable indicator of future performance.